Our Daily Saab: Unplugged
December 16 is the day Saab’s fate will be decided. Court appointed administrator Guy Lofalk, who yesterday was ready to pull the plug, pulled it today. Currently, Saab is under creditor protection. However, Lofalk asked the Vänersborg District Court to lift the protection, opening the door to final bankruptcy. In a statement cited by Reuters, Lofalk said:
“Since the required funding has not been received and the stated schedule not been kept, the (Saab) companies lack the ability to pay upcoming liabilities.”
Lofalk also named General Motors’ unwillingness to approve proposed deals. GM had driven what looks like the final nail in the coffin, by denying the deal that was proposed a few days ago:
“We have reviewed Saab’s proposed changes regarding the sale of the company. Nothing in the proposal changes GM’s position. We are unable to support the transaction.”
GM appears to be unwilling to support any sale involving its technology, and without that technology, Saab is worthless. The proposed investors, including a Russian banker who had his banks taken away and who is out on bail, an alleged hedge fund of doubtful pedigree, and a Chinese busmaker, did not install much confidence.
The court in Sweden gave Saab and its creditors until December 15 to submit their opinions. A day after, the court will render a decision. Says Reuters:
“Ending protection from creditors would open the way for them to file for Saab’s bankruptcy. The court already has one claim, which is under suspension.”
Even at Saabsunited, the last bastion of optimism, the moral is sinking:
“Hope for the best, prepare for the worst.”
Automotive News China [sub] reports that “Saab Automobile AB is holding discussions with China’s Zhejiang Youngman Lotus Automobile and a Chinese bank over borrowing about 600 million euros (5 billion yuan) over two years.”
The source of that news is Victor Muller. Basically, what he is proposing is that instead of buying stock, the investment will be made as a loan, most likely secured by what is left of Saab. Good luck with that.
If Saab defaults on the loan, the lender would end up with a Saab shouldered with humongous legacy costs, and with no technology from GM.
Muller told Bloomberg he would need the loan in a “very few days” to avert bankruptcy.
In a very few days? A loan? From China? Is that Muller’s way to say: “It’s over?”
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Saab Automobile's administrator Guy Lofalk reports that the company has borrowed new money without his knowledge. It is against the rules of law for a company, write Lofalk in the notification. Guy Lofalk notifies Saab Automobile to have pulled on a debt of EUR 3.3 million, about 30 million, during the reorganization. It is a task that Lofalk himself to be found out on 8 December and then only after he sought to stop reconstruction. The new debt may be due to the liquidity situation is not paid, writes Guy Lofalk in its notification to Vänersborg: "This debt has been incurred without my knowledge or my consent." The administrator determines that the conduct is contrary to the provisions of the law for reorganization and against his instructions to the company. Saab Automobile has until December 15 at 13.00 to provide comments on the notification.